Despite the decline in sales volume, the February 2014 median price of a California home rose $5,000, or 1.4 percent, to $350,000 from $345,000 in January. On a year-ago basis, median home prices have jumped 21.1 percent.

“The uptick in median home prices in February means little as seasonal factors continue to impact both sales and prices,” said Schnapp. “Given the lackluster sales volume, however, median prices are unlikely to see the rapid gains that characterized the first half of 2013.”

The number of California homeowners with more than 10 percent equity in their homes increased 2.3 percent, or nearly 120,000, in February.

“The decline in negative equity is certainly good news,” said Schnapp. “But, it is important to keep in mind that 1.2 million California homeowners, or 13.9 percent, remain underwater and will continue to create significant headwinds for the California housing market recovery.”

Institutional Investor LLC and LP purchases gained 1.6 percent for the month but are down 35.4 percent from February 2013. Despite February’s modest gain, LLC and LP purchases were 50.1 percent below their December 2012 peak.

“For more than a year now, institutional investors have been gradually reducing their purchases of California real estate,” said Schnapp. “Rising prices have reduced the return on investment, making homes less attractive as an investment option.”

“In sum, the California housing market continues to improve,” said Schnapp, “just more slowly than most analysts expected, given that we are in the fifth year of an economic recovery.”